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Monthly Archives: November 2012

An estimated 200,000 people have taken to the streets of Rio in a mass protest demanding Brazilian President Dilma Rousseff veto a bill which would change how oil royalties are shared throughout the country.

“Against injustice, for Rio”: 200,000 people occupy Rio’s Centro district in protest at the proposed “illegal” Royalties Bill on 26 November. Photo by Carlos Magno/Governo do RJ.

The bill would take revenue away from the oil-producing states of Rio, São Paulo and Espírito Santo and redistribute it in part to non-producing states.

Rio government officials argue the state would lose R$77.3 billion (US$37.2 billion) by 2020, and R$2 billion (US$1 billion) in 2013 alone, if the bill passes.

President Rousseff has until 30 November to decide whether she will ratify the bill as it stands, approved by both the Senators last year and the Deputies last week, or veto it partially or in full.

If the new bill is passed, oil producing states’ royalties will be cut from the 26.25% to 20% for states. However for municipalities, it would be cut to 15% in 2013, and to 4% by 2020, according to O Globo newspaper.

Of 92 municipalities in Rio state, 87 currently receive the royalties.

The federal government paid royalties of R$12.99 billion in 2011, up 31% on 2010. Rio state received the biggest slice – R$2.46 billion – up from R$2.03 billion. Producing states argue they are entitled to the royalties as they foot the bill – both financially and ecologically – for offshore oil exploration.

One of the biggest bones of contention is that the bill would allow the government to rewrite already-signed contracts – something they say would be “illegal”. Rio Governor Sérgio Cabral told crowds this would set “an extremely dangerous precedent”. He said he is confident the president would veto the bill, but that Rio would appeal if not.

Investing in Brazil’s concession plans, which represent billions of reais of infrastructure contracts, could provide the answer for troubled European economies, Brazilian President Dilma Rousseff has said during an official trip to Spain.

The state of the European economy and potential business deals were top of Brazil’s agenda on the visit, and other issues, including past immigration issues, were pushed aside.

President Rousseff, who also attended the 22nd Ibero-American Summit in Cádiz, criticized “excessive austerity measures”, making reference to the IMF’s recommendations, and reiterated her belief that only by sustained growth through investment can a country emerge from such an economic crisis, pledging her country’s support:

“Brazil can and must contribute to more economic growth, more options for solving the crisis, because this must be done through growth,” President Rousseff said, speaking alongside Spanish Prime Minister Mariano Rajoy in the capital, Madrid.

The president used the opportunity to rally other countries to help Europe get itself out of the crisis, and left little doubt as to where she believed Spain should aim this crisis-averting investment.

Rousseff noted favorable conditions for concession projects, including the R$133 billion (US$64 billion) already announced for roads and railways, with more to come for ports and airports, as well as R$30 billion committed to the Rio-São Paulo trem-bala (high-speed train).

Contracts for telecom infrastructure would be available, an area where Spanish telecoms giant Telefónica already has a foothold through Vivo, Brazil’s second largest telecoms company.

Spain’s King Juan Carlos I said he wanted Brazil to “count on Spanish companies” for the 2014 World Cup and 2016 Olympics, advocating “the possibility of procedures facilitating highly-skilled Spanish workers to stay temporarily [in Brazil]. At the same, we want to encourage Brazilian companies to invest in Spain.”

President Dilma Rousseff is reported to have finalised the long-awaited “ports package”, the government’s next big investment program to upgrade the country’s overstretched infrastructure, improving ports and how they are managed to increase competitiveness.

Super-size shipping is the new order of things in Brazil. Photo: tyler_haglund (Flickr/CC)

Details of the investment plan will be presented by the president on November 19th, after her official trip to Spain.

According to a report by Valor, sources close to the president say the package will include “ambitious” investment of R$40 billion (around US$20 billion), and be “light” on regulatory amendments,

The majority of the funds are expected to come from the private sector and, in an apparent policy U-turn, new privately-run terminals will be authorized.

A major management reshuffle is expected for companies running Brazil’s eighteen public ports, although President Rousseff has rejected a national port authority, akin to the now-defunct Portobrás.

Not not only does it take longer in Brazil but, according to a study by development center Fundação Dom Cabral, it also costs more: exporting a container in Brazil costs US$1,790 – seventy percent more than in the U.S. (U$1,050) and three times the cost in Singapore (US$456). The cost of pilotage in Brazilian ports is also high, costing 2.4 times the international average.

The first terminals to undergo concession are expected to be those in Manaus, Amazonas and Ilhéus, Bahia, and then in Espírito Santo and Santa Catarina states, as well as in Itaguaí in Rio State.

The semi-privatisation concession scheme has already been undertaken for the country’s roads, railways and airports – in theory providing a much-needed R$133bn boost to the country’s ailing infrastructure.